Obama Says Bailout Saved Auto Industry From ‘Free Fall’

June 3 (Bloomberg) -- President Barack Obama said the
bailout of the auto industry has been vindicated by the
resurgence of Chrysler Group LLC and General Motors Co. and the
addition of jobs making vehicles across the country.

Speaking at a Chrysler plant in Toledo, Ohio, that he
called “the economic rock of the community,” Obama said he
refused to let the industry sink in an “uncontrolled free
fall” during the recession, an outcome that would have had
effects that rippled nationwide. Now “this industry is back on
its feet, repaying its debts, gaining ground,” he said.

The economy still faces challenges and “headwinds,” Obama
said, hours after the Labor Department reported that payrolls
increased by a less-than-projected 54,000 last month and the
unemployment rate rose to 9.1 percent from 9 percent.

Obama’s trip to Ohio today is his 14th as president to the
battleground state that has backed every winning presidential
candidate since 1964.

The stop at the Toledo plant, which assembles Jeep
Wranglers, follows a week of White House publicity about the
automotive revival. That included a May 28 radio address by Vice
President Joe Biden and a June 1 White House report saying $80
billion of federal aid for the auto industry saved at least 1
million jobs at automakers and their suppliers and will cost
taxpayers less than originally forecast.

Credit for Revival

The president is seeking to gain credit for the auto
industry’s government-aided revival. Polls at the time showed
the rescue plan for GM and Chrysler was unpopular and
Republicans criticized it.

Workers should remember “the improbable turnaround that’s
taken place here at Chrysler,” Obama told plant workers. “I
want you to remember all those voices who were saying, ‘No, no
we can’t.”

He cited last night’s announcement that Fiat SpA and the
U.S. Treasury Department have reached an agreement for the
Italian auto company to buy the government’s remaining 6 percent
stake in Chrysler for $500 million. Chrysler already has repaid
$7.6 billion in U.S. and Canadian government loans.

The government ultimately will lose about $1.3 billion of
the amount put into the automaker under Obama and former
President George W. Bush, according to Treasury. A March
Congressional Budget Office report said the total cost of the
aid will be about $14 billion.

Loss of Industry

If the government hadn’t acted, Obama said, “by the time
the dominos stopped falling, more than a million jobs, in
countless communities, in a proud industry that helped build
America’s middle class for generations, wouldn’t have been
around any more.”

Republicans say the federal aid was unnecessary government
involvement in private industry.

“The administration’s auto bailout is nothing to
celebrate,” said Brendan Buck, a spokesman for House Speaker
John Boehner, an Ohio Republican. “The model the White House
should be touting is Ford, which, instead of relying on a
taxpayer-funded bailout, saw trouble coming and made the tough
decisions necessary to preserve jobs and weather the storm.”

“Unemployed workers in Ohio aren’t looking for a
presidential victory lap. They need jobs,” Kevin DeWine,
chairman of the Ohio Republican Party, said in a statement.

Toledo’s Recovery

In Toledo, where GM last week said it would add 200 jobs,
the economy is on the mend, Mayor Michael Bell said. The
Bloomberg Toledo Index of 33 companies, designed to measure the
local economy, has risen 11.5 percent in the past year.

“Toledo is on the upswing,” Bell said. “Are we still
hurting? Yeah, but we are a little bit better off than a couple
of years ago.”

Transportation-equipment manufacturing employment in
metropolitan Toledo has more than doubled to 8,200 from 3,400 in
June 2009, according to the Bureau of Labor Statistics. As
recently as June 2008, transportation equipment jobs topped
11,000.

At Chrysler, where the Toledo plant produces 200,000 cars a
year, U.S. market share rose to 10.9 percent last month from 8.5
percent in May 2009, when the automaker was under bankruptcy
court protection, according to Autodata Corp., an industry
researcher based in Woodcliff Lake, New Jersey.

Altogether, Chrysler has added almost 6,000 jobs since
leaving bankruptcy, Shawn Morgan, a company spokeswoman, said in
an e-mail.